Capital–Labor Substitution and Competitive Nonlinear Endogenous Business Cycles

Grandmont, Jean-Michel; Pintus, Patrick; Vilder, Robin de

doi:10.1006/jeth.1997.2383

Cited by 169 publications

(283 citation statements)

References 17 publications

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“…In both the cases the impact of concavity through the elasticity of labor supply emerges as dominant feature. 10 Interpretation…”

Section: Homogeneous Utilitiesmentioning

confidence: 99%

On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

Bosi¹,

Seegmuller²

2010

Journal of Mathematical Economics

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In this paper we address the question of deterministic cycles in a Ramsey model with heterogeneous in nite-lived agents and borrowing constraints, augmented to take into account the case of elastic labor supply. Under usual restrictions, not only we show that the steady state is unique, but also we clarify its stability properties through a local analysis. We nd that, in many cases, the introduction of elastic labor supply promotes convergence by widening the range of parameters for saddle-path stability, and endogenous cycles can eventually disappear. These results are robustly illustrated by means of canonical examples in which consumers have separable, KPR or homogeneous preferences. JEL classi cation: C62, D30, E32.

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“…In both the cases the impact of concavity through the elasticity of labor supply emerges as dominant feature. 10 Interpretation…”

Section: Homogeneous Utilitiesmentioning

confidence: 99%

On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

Bosi¹,

Seegmuller²

2010

Journal of Mathematical Economics

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“…For example, Benhabib (1998) illustrates that self-fulfilling expectations about future investment returns are important in generating indeterminate equilibrium. Grandmont et al (1998) show that the capital-labor substitutability affects the robustness of sunspot equilibrium. Moreover, with endogenous capital, our model becomes a natural extension of Farmer and Guo (1994), which ensures that the same mechanism that causes indeterminacy in their paper still exists in the New Keynesian framework.…”

Section: Introductionmentioning

confidence: 95%

Increasing Returns and the Design of Interest Rate Rules

Xiao

2007

Macroecon. Dynam.

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We introduce increasing returns to scale into an otherwise standard New Keynesian model with capital, and study the determinacy and E-stability of Taylor-type interest rate rules. With very mild increasing returns supported by empirical research, the conventional wisdom regarding the design of interest rate rules can be overturned. In particular, the "Taylor principle" no longer guarantees either determinacy or E-stability of the rational expectations equilibrium.

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“…These are quite new results because the widespread view in literature on overlapping generations models is that the rise of periodic orbits and of indeterminacy is due to distortions in the production side of the economy: non perfect competition, positive externalities and so on (see e.g. Reichlin 1986;Grandmont et al 1998;Cazzavillan et al 1998;Cazzavillan 2001), while in our model these dynamic regimes can be observed assuming a very simple production technology (i.e. a Cobb-Douglas one) and perfect competition among firms.…”

Section: Introductionmentioning

confidence: 70%

Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

Antoci

Sodini

2009

Chaos, Solitons & Fractals

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We analyze an overlapping generations model where agent's welfare depends on three goods: leisure, environmental quality and consumption of a private good. We assume that the production process of the private good depletes the natural resource and that the consumption of the private good alleviates the damages due to environmental deterioration. In such context, we show that individuals' reactions to environmental deterioration may lead to complex dynamics, in particular to the rise of periodic orbits and chaos.

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Capital–Labor Substitution and Competitive Nonlinear Endogenous Business Cycles

Cited by 169 publications

References 17 publications

On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

On the Ramsey equilibrium with heterogeneous consumers and endogenous labor supply

Increasing Returns and the Design of Interest Rate Rules

Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

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